Millionaire Watch: In Silicon Valley a Countdown Is Under Way

Luxury Merchants Hope to Clean Up The Day LinkedIn Stock Unlocks

PALO ALTO, Calif.— Eric Trailer is counting down to Nov. 21 like a merchant waiting for Black Friday.

"We have anticipated this for quite some time," he says of that Monday date, adding that he's tripled staffing at his business in hopes of a sales bonanza.

That Monday is when social-networking site LinkedIn Corp.'sLNKD-10.52% employees can begin selling their stock, and Silicon Valley businesses like Mr. Trailer's mortgage firm are gearing up to steer the wealth their way.

Car dealers are readying Lexuses and Lamborghinis, jewelers are stocking up on Rolexes and financial advisers are studying how to woo newly moneyed clients.

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Ducati motorcycle

"I've built a team of people dedicated to finding traction with the high-tech crowd" this year, says Don Endo, chief executive of Qvale Auto Group Inc., a San Francisco operator of dealerships selling uber-luxury cars. Recently, he helped stage an event featuring the new $400,000 Aventador from Lamborghini at the swanky W Hotel in downtown San Francisco—conveniently located near a cluster of tech start-ups.

In January, when LinkedIn filed to go public, Mr. Trailer, a partner in Palo Alto, Calif., mortgage company Absolute Mortgage Banking, says he realized the IPO would mint a new generation of Internet millionaires once the "lockup" period on their shares lifts Nov. 21.

Nov. 21 is when social-networking site LinkedIn Corp.'s employees can begin selling their stock, and Silicon Valley businesses are gearing up to steer the wealth their way. Shayndi Raice has the story on Digits.

As with all IPOs, LinkedIn's investors, executives and employees who held shares before the listing aren't allowed to sell them immediately and generally need to wait 180 days before they can begin cashing out. The company currently has more than 1,500 employees; it's unclear how many of them will be eligible to unload shares.

The lockup countdown became a Silicon Valley tradition during the late-1990s dot-com boom, but the windfalls became a distant memory in recent years as the IPO market dried up.

Back then people splurged wildly on homes, cars, second homes, fine furniture—basically any manner of excess. This time people are expecting a slightly more understated buying tone, given how much people were burned last time by the dot-com bust.

Since LinkedIn went public, San Francisco-area luxury merchants have been eyeing their calendars for other wealth events, too. In Oakland, Internet music company Pandora Media Inc.P3.61%'s IPO lockup ends mid-December. Zynga Inc., the San Francisco social-gaming company, has filed to go public, with the big kahuna—Facebook Inc.—expected to follow next year.

Of course, the tech good times may not last. Groupon Inc. in Chicago on Friday unveiled lower-than-expected terms for an IPO, even though it was an Internet darling just earlier this year.

With LinkedIn's shares trading at over $87, nearly double their May 19 $45 IPO price, its lockup expiry will free about 50 million shares and another 44 million or so over time, valued at $8.17 billion combined as of Friday's close. LinkedIn declined to comment.

Sumana Rao, co-owner of Napoleon At Home Staging, a Silicon Valley interior-design and home-staging business, says she has been stockpiling everything from art to silverware because "we can see we'll have an onslaught of staging projects" partly related to expiring lockups. Her services include helping homeowners to deck out their homes in a way that tempts buyers—purchasers who may then hire her to further re-style rooms.

Brendan Harrington, president of Lexus of Stevens Creek in San Jose says he's trying to acquire more space ahead of LinkedIn's lockup expiry. "We'll start seeing LinkedIn people as soon as they can cash in their stock," he predicts; "We know that effect."

San Francisco's Munroe Motors motorcycle shop plans to add a salesperson and increase inventory of "exclusive" bikes like $30,000 Ducatis and $20,000 Triumphs at least 10% next year, says co-owner Nick Hayman. With the unlocking of tech stocks, he says, "we're in a little bubble here."

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Eric Trailer said he has tripled staffing at his mortgage firm in Palo Alto.
Absolute Mortgage

Some LinkedIn employees aren't waiting for the stroke of the clock. In June, LinkedIn vice president Jonathan Lister spent $2.45 million on a four-bedroom, two-bath, 2,210 square-foot home in Silicon Valley, more than 33% over the property's $1.829 million list price, according to public records and real-estate listings. Mr. Lister didn't respond to requests for comment.

Derek Fowler, an investment adviser with Morgan Stanley Private Wealth Management in Menlo Park, says he's had to study up on the lockup policies of several tech companies after the IPO drought left him a bit rusty. "There are more questions than I can remember about lockups now than in the last four or five years," Mr. Fowler says.

Charities are preparing, too. The Silicon Valley Community Foundation, which manages charitable giving for affluent locals, accepted an invitation to visit LinkedIn's headquarters in April. The foundation's development director, Michelle Sklar, says she and other groups pitched an audience of several hundred employees on options for giving money away.

"In years past, we'd give our presentation to companies several times a month," Ms. Sklar says. But due to the rising number of new start-ups, she says, "we're giving the presentation several times a week to tech companies. We're a little tired."

With current and former LinkedIn employees scouting out homes, some local real-estate agents say they have encouraged potential sellers to delay listing until the lockup ends. "People remember that in 1998, 1999 and 2000, real-estate prices doubled in five years," says Erika Enos, a real-estate agent in Silicon Valley with Keller Williams Realty. "So now sellers are looking forward to that again" with lockups expiring.

Jerry Feldman, an entrepreneur who lives near LinkedIn's Mountain View offices, says he was thinking of selling his three bedroom, 1,900-square-foot townhome earlier this year for about $800,000. Then, "LinkedIn stock kept going up," says Mr. Feldman, 44 years old. He took that as a cue that prices might rise and decided to keep his home off the market until after the company's lockup expiry.

Now Mr. Feldman may further postpone selling while he eyes a bigger prize, the expected IPO of nearby Facebook—likely to be the biggest tech offering since Google Inc. stock debuted in 2004 and unleashed a post-lockup windfall as Googlers bought homes, cars and planes. "That will be a great thing for this neighborhood," he says.

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